Use gross profit
Apply gross margin so the estimate reflects value after direct service costs.
LTV Calculator
Estimate customer lifetime value from recurring revenue, gross margin, and churn—then compare it with acquisition cost.
Directional SaaS unit economics
Calculate customer LTV
Enter monthly values and customer churn as a percentage.
What customer lifetime value means
Customer lifetime value estimates the economic contribution of an average customer across the expected relationship. For subscription companies, a practical model combines average monthly recurring revenue, gross margin, and customer churn.
LTV is an estimate, not a guaranteed future cash amount. It becomes less reliable when cohorts are young, churn changes rapidly, or a small number of large accounts distort the average. Segment the inputs whenever customer behavior differs meaningfully.
Simple SaaS LTV formula
(Monthly ARPA × gross margin %) ÷ monthly customer churn %Make LTV useful for decisions
Use consistent cohorts and compare lifetime value with the fully loaded cost and time required to acquire a customer.
Measure customer churn
Use logo churn for customer lifetime and keep revenue churn analysis separate.
Segment the result
Compare LTV across plans, geographies, company sizes, and acquisition channels.
LTV calculator FAQ
What is a good LTV to CAC ratio?
Benchmarks vary. Many SaaS teams use 3:1 as a reference, but payback period, growth rate, gross margin, and capital strategy also matter.
Should LTV use revenue or gross profit?
Gross-profit LTV is usually more decision-useful because it accounts for the direct cost of delivering the product or service.
Why does lower churn increase LTV?
Lower churn extends expected customer lifetime, creating more recurring gross profit from the same acquired account.